Summary

Ferd Invest - 2011 summarised

Summary

Ferd Invest operates as a financial investor in companies that we believe to have unique qualities. We aim to maintain a long-term ownership interest in such companies, subject to the pricing remaining attractive. Our objective is to achieve a higher return than is generally available in the markets in which we invest.

Ferd Invest aims to invest in companies with unique products, better than average profit margins and management that prioritises long-term value creation. We believe that by focusing on a limited number of good companies we will outperform the return from the stock markets in the countries where we invest. Ferd Invest currently invests in the Norwegian, Swedish, Danish and Finnish stock markets. Ferd Invest will be close to fully invested at all times, and does not wish to gear the portfolio with borrowing or sell shares it does not own (short selling).

Main features

Weak conditions in stock markets in 2011

Ferd Invest pruduced a return in line with the market in 2011

Performance significantly better than benchmark over the last five years

Positive outlook for stock market conditions in 2012

Markets
2011 was a weak year for the Nordic stock markets overall, with a decline of 18%. Among the Nordic markets, Oslo Børs fell least in 2011, with a decline of 11%, while Helsinki was the weakest market with a decline of around 26% in Norwegian krone terms. Markets were characterised by increased concern over the outlook for the global economy and worries over the prospect of weaker corporate earnings in 2012. In addition, persistent uncertainty over the Eurozone collaboration and the economic situation in southern European countries also combined to reduce the markets' risk appetite.

Investment return
The market value of Ferd Invest’s total portfolio fell by 18% in 2011, which was in line with the markets with which we compare our performance.

Both our portfolio and stock markets in general were characterised by unusually high correlation between shares across different countries and sectors. This meant that few shares showed a markedly stronger or weaker performance than the overall market in 2011. However, some of the small and medium-size companies in the portfolio did produce a very good performance in 2011. The shares that made the best contribution in 2011 were Axis, Opera and Millicom.

Over the course of the last five years, the value of our investments has risen by 22 percentage points more than the overall change in value in the stock market in which we operate, representing a substantial outperformance over this period.

Portfolio allocation
At the close of 2011, the market value of the Ferd Invest portfolio was NOK 2.9 billion. The portfolio is invested in the four Nordic stock markets (excluding Iceland). The largest investments at the close of 2011 were in Autoliv, Subsea 7, Millicom, Opera and RCCL. The five largest investments accounted for around 35% of the total value of the portfolio at year-end. Norwegian and Swedish shares make up around 80% of the portfolio. The benchmark we use to compare our performance is the MSCI Nordic Mid Cap Index.

Organisation
There were no changes to the Ferd Invest team in 2011. The three members of the team have between them some 40 years' experience of working in the financial markets.

Future prospects
The latter months of 2011 were affected by increasing concerns over the outlook for global growth and corporate earnings. It is clear that both the global economy and listed companies will face significant challenges in 2012. Investors are particularly concerned over the continuing problems in some EU countries and the prospect of slower growth for the Chinese economy. However, we believe that share prices have very largely discounted these concerns, and it seems to us that investors are not all as pessimistic as they were at the start of 2011. Consequently, 2012 may be a year in which investors become willing to take on more risk, so we expect to see rising share prices in the months ahead.

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